MARTIN FLANAGAN

High street sales grew at a “much stronger rate than expected” in September, driven by strong demand for autumn fashions and the supermarket price war, a new survey showed yesterday.

The report from the CBI employers lobby group gave a much more upbeat picture of the retail sector after some lacklustre data in the summer.

It said that the number of retailers who said sales rose in September, compared with those who said they fell, hit a balance of +49 per cent, against expectations of +35 per cent. It was the CBI monthly distributive trades survey’s highest level since May.

The report said retailers reporting sales volumes above average for the time of year was at a balance of +35 per cent, the highest since April 2007. Economists had expected a balance of +21 per cent.

The report said the biggest drivers of retail demand were grocery and clothing sales, with shoppers buoyed by rising wages and low inflation.

Rain Newton-Smith, the CBI director of economics, said: “As the summer has been drawing to a close, consumers have been out on the high street boosting sales and orders for UK retailers.

“Low inflation and the recovery in wage growth are helping to stimulate consumer demand, but the slowdown in the global economy and tight margins mean retailers won’t get ahead of themselves as we head into autumn.”

She added: “Clothing and the food and drink sectors have led the way, and with the general outlook for the UK economy remaining positive, the expectation is that there will be further encouraging results next month.”

Firms said orders to suppliers jumped to a balance of +30 per cent, the quickest pace since December 2010, and they are expected to grow further next month.

Retailers are also positive over the longer term with a balance of +51 per cent saying they expect sales volumes to increase over the coming 12 months.

Howard Archer, chief UK and European economist at IHS Global Insight, commented: “A very strong CBI distributive survey for September provides reassurance that consumers are still very alive and kicking.”

Recent data had shown that retail sales volumes rose a modest 0.2 per cent month-on-month in August having been flat in July.

Archer added: “There have been signs that consumers took a bit of a breather over the summer.” He said this might well contribute to UK GDP growth moderating to about 0.5 per cent quarter-on-quarter (in Q3) from 0.7 per cent in the second quarter.

Despite the better high street picture this month, many City economists remain concerned about the sustainability of the UK economic recovery because it is mainly driven by consumer spending and debt, rather than business investment and exports.

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